What Can I Plant to Make Some Money?

In my recent Extension Advisory Committee meetings before wrapping up for 2013 one thing that was emphasized was economic sustainability must continue to be a component of UF/IFAS Extension programming. This was following a year where farmers watched corn drop from $7/bushel at planting time to $5 at harvest and cotton fall from 0.95/lb at planting to 0.75 at harvest. Economics have been on many peoples mind, and seems that most of my recent calls have started like this:

Farmer: “Hey Mace.”

Mace: “Hey, Whats Up?”

Farmer: “What Can I Plant to Make Some Money?”

Crop comparison ToolThe conversation usually turns from there, and you just never know where it will lead. A few farmers have asked about crop budgets. We at UF/IFAS Extension usually lean on the University of Georgia Extension Economists including Drs. Smith and Shurley and Mrs. Amanda Smith and their team to provide detailed budgets. It is usually later in the spring before detailed budgets are available. However, UGA has released the preliminary Crop Comparison Tool. Farmers can use the general categories and plug in their expected costs if they would like to get started with budgeting for the year. Complete budgets for 2013 are available online using the following links. I assume these links will be  updated as soon as the 2014 budgets are released:

Printable Budgets

Budgets in Microsoft Excel

So back to my farmer phone calls and what do I see, hear, and think about planting  to “make some money.” Remember I am not an economist, and I’m usually wrong. But www.flacrops.com is where I pontificate on the Hot Topics.

  • Corn: I think we can contract corn locally for January 2015 delivery at about 5.25/bushel. We might see a little weather scare bump in April or May, but locking in some irrigated production could be a good risk tool as most of the economists expect lower prices at harvest.  I have encouraged all my farmers who want to be in the grain business to put in a grain bin before they buy a combine. The grain bin is a much more valuable tool and custom operators will harvest your farm at break-even equipment ownership and operation costs. I would begin my planting decisions by planting every acre that I expected I could hold in that grain bin to corn, and use the marketing or forward contracting tools available. Remember August delivery and January delivery are two entirely different situations.
  • Peanuts: I think most of our peanut growers will be offered a contract equal to the tons they delivered in 2013. I know many farmers have more lucrative options with their buyers. However, that is my expectation for most farmers. I also think this peanut market is going to get overplanted without other crops with attractive profit margins. We sold too many peanuts for $385 per ton in 2012 to encourage taking risks while we have these high carryout levels. I think we can survive if a $450-475 contract is offered. However, a few probably won’t be able to pay all their costs at those price levels. There is an important difference between uncontracted peanuts being sold at $385 in 2012 and 2014. In 2012 the advance contracts were $700-$750 on the first contracted tons. That leaves a lot of wiggle room to sell a few tons at $385. If we receive long-term average rainfall, I think we grow a BIG peanut crop.
  • Cotton: Cotton is a wildcard locally. I’m hearing about more acres and I love to see it here as a rotation crop. However I have to be realistic with yield expecations on our tired sandy soil in both irrigated and dryland fields. I don’t feel comfortable budgeting above 800 pounds on dryland or 1000 pounds on irrigated for our average conditions. Obviously some are doing better, and we are coming off two wet years.  Looking at those numbers, 800*0.77= $616 is not a lot to work with. One thing i noticed on the UGA Crop Comparison Tool, they used $94 for the fertilizer budget on dryland production. I think fertilizer costs will be higher for most farmers. Look back at your expenses for 2013 and talk to your dealers about prices you will pay for inputs.  On irrigated fields I am thinking 1000*0.77=$770 gross. After $200 per acre land rent, and $75 per acre for irrigation. I don’t think we can get an irrigated crop grown and harvested for $500. Maybe we can hit bigger yields, but that’s a longshot in my opinion. With good rotation and better soils some will make cotton pay through higher yields.
  • Soybeans: I think there will be more soybean planted locally this year. Most of our producers are keeping inputs cost low and seeing reasonable yields. I believe we are looking at another situation where prices will be high at planting and low at harvest, so marketing will be critical. We don’t have any silver bullet for high yields on our dryland fields. We know good fertility, August rainfall, and the right varieties are all important to making high yielding beans. In some cases yields well above the 30 bushel dryland yield included in the Crop Comparison Tool are achievable. Soybeans actually look like a bit of a bright spot in the crop budget with decent yield levels.

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